India’s economy shows resilience in January: RBI bulletin highlights strong growth and favorable outlook

India’s economy remained resilient in January even as global uncertainty picked up, with steady industrial output, firm services activity and stronger sales growth reported by listed companies, the central bank said Friday in its February State of the Economy bulletin.

Domestic high-frequency indicators showed industrial activity stayed strong, while the services sector “sustained its healthy growth,” the Reserve Bank of India (RBI) bulletin said.

Quarterly results of listed private companies pointed to strengthening aggregate sales growth, particularly in manufacturing, where several industries recorded double-digit expansion, it said. Services companies also posted stable revenue growth, indicating continued demand momentum.

Overall, the RBI said the near-term outlook remains favourable, with the economy “well-positioned to sustain its high growth momentum” on the back of consumption, investment and productivity-enhancing reforms.

Mega Deals

The RBI said the twin trade agreements with – the European Union and an interim trade deal with the United States- are expected to “improve market access, enhance export competitiveness and integrate Indian firms more deeply into global value chains” over the coming years.
Total fundraising for capital expenditure April-Dec FY2026 were higher than 2019-20, signalling firm investment appetite, the RBI said. Although banks and financial institutions sanctioned a lower total cost of new capex projects in Q3 compared with the previous quarter, the amount approved still exceeded the post-pandemic average, reflecting continued optimism around new investment.The central bank said inflation is expected to remain close to the target in the near term and that it is providing “a positive growth-inflation balance”.

The headline consumer inflation remained benign in January in the first print under the revised CPI series and the price pressures were relatively contained, with core inflation excluding precious metals falling to 1.9%, while food inflation eased on softening vegetable prices. Inflation is likely to stay near target, helping maintain macroeconomic stability, the central bank said.

The central bank cautioned that the global outlook and financial markets remain “in a state of flux”, with geopolitical tensions, concerns over public debt sustainability in advanced economies, stretched valuations in artificial intelligence-linked equities and potential disruptions to the software services industry posing downside risks.